Phoenix Life Limited

FCA action

fines

2

in fines

£950k

most recent

March 2003

• Fined £950,000 on 25 March 2003

  Final Notice Issued on 25 March 2003 on Royal & Sun Alliance Life and Pensions Limited and Royal & Sun Alliance Linked Insurances Limited (RSA) THE PENALTY 1.1 On 25 March 2003 the FSA imposed, pursuant to Section 206 of the Financial Services and Markets Act, a financial penalty on RSA of £950,000 in respect of breaches of the Rules of the Personal Investment Authority, the Adopted LAUTRO Rules and the Statements of Principle of the Securities and Investments Board. REASONS FOR THE PROPOSED ACTION 2.1 The FSA is imposing a financial penalty on RSA in respect of breaches relating to mortgage endowment mis-selling and related deficiencies in RSA's sales systems and control functions between July 1997 and July 1999. In particular: (a) in the period 1 July 1998 to 30 June 1999, the results of a sample mailing indicate that in some cases, RSA's advisers failed to use their best endeavours to make only suitable recommendations to mortgage endowment customers; (b) in the period 1 January 1997 to 26 July 1999, RSA's procedures did not, in a number of cases, ensure that its advisers' best endeavours would result in them only recommending RSA's Homeplan policies where such contracts were suitable for customers; (c) during the material time, in certain cases, RSA's monitoring was inadequate in relation to the suitability of recommendations made by certain of its advisers; and (d) in consequence, during the material time, RSA failed in the above respects to exercise due care. 2.2 Following visits by regulators, in July 2001 RSA was required to conduct a sample review of past mortgage endowment business conducted during the period from 1 July 1998 to 30 June 1999. An independent firm of accountants then reviewed the results. FSA believes that up to 20 per cent of customers during this period could have been sold unsuitable policies. 2.3 As a separate issue, RSA mortgage endowment policies were usually recommended for a term of 25 years but could also be sold for shorter periods giving the policy less time to achieve the target sum. In December 1996, RSA issued guidance to its advisers telling them not to sell short-term contracts unless the customer was insistent, in which case that insistence should be documented on file. Despite this, some advisers did not appear to take account of or, in some cases, know about the guidance. 2.4 In committing these breaches, RSA demonstrated failings which demand a significant financial penalty. These failings are viewed by the FSA as particularly serious in light of the following factors: (a) they related to the sale of mortgage endowment policies used as vehicles to repay a mortgage - a mortgage is for most people the most significant financial transaction of their lives, and where it is mis-sold, it can have the most serious consequences; (b) there was a serious flaw in the processes in that the three risk categories used in RSA's fact find documentation at the material time did not require the attitude to risk of wholly risk-averse customers to be explicitly recorded. Therefore the process of checking fact find documents could not have enabled fact find checkers easily to identify wholly risk-averse customers from that documentation alone. The FSA places very great emphasis on the importance of adequate systems to ensure compliance with regulatory rules and standards; (c) there were also failings by RSA to monitor its own processes adequately; and (d) the size and nature of RSA meant that these failures exposed a large number of consumers to the possibility of loss. 2.5 In deciding the level of penalty to be imposed, the FSA has recognised that these failings have been mitigated by RSA. In particular, RSA: (a) proactively identified the issue in relation to short-term contracts through its own internal procedures; (b) through a redress procedure, has ensured that no customer has suffered loss in relation to the issue of short-term contracts; (c) has devoted substantial resources over a considerable period of time to the review of its mortgage endowment business; (d) has readily agreed to deal with qualifying cases identified through the sample past business review through a process that will lead to an offer of redress being made; and (e) in addition to industry-wide reprojections, RSA has previously warned a significant number of its policyholders of the risk of policies not providing sufficient funds at maturity to discharge any mortgage in connection with which it was taken out. 2.6 Current mortgage endowment policyholders who were sold policies between 29 April 1988 and January 2000, when RSA ceased offering such policies to new customers, will receive redress where appropriate. 2.7 RSA failed to take sufficient steps to address the problems regarding the sale of short-term contracts for some 18 months. However RSA has now proactively examined and dealt with each case. As of February 2003, out of the 2,081 policies sold 1,779 (85%) of customers have been offered redress totalling some £5.6 million. CONCLUSION 3.1 Taking into account the seriousness of the contraventions and the risks they posed together with the mitigating factors, the FSA has decided that a financial penalty of £950,000 be imposed. 3.2 The full text of the Final Notice is available from the FSA.

• Fined on 27 August 2002

  1. A financial penalty of 1.35 million pounds was imposed jointly on Royal & Sun Alliance Life & Pensions Limited, Royal & Sun Alliance Linked Insurances Limited and Sun Alliance and London Assurance Limited (collectively described below as R&SA) in August 2002. 2. This penalty related to significant weaknesses in R&SA's conduct of the Pensions Review (which was an industry wide review of personal pensions business transacted between 29 April 1988 and 30 June 1994). These weaknesses arose in the period to August 2000. 3. In particular, R&SA had not: Issued mailings to investors in accordance with the Guidance; Taken adequate steps to identify its starting population accurately; Taken adequate steps to identify all reviewable cases; Reviewed certain cases within a reasonable timescale; Reviewed certain cases within deadlines prescribed by PIA; Adequately monitored its Pensions Review exercise; and Demonstrated adequate control of its Pensions Review exercise. 4. R&SA has now undertaken extensive remedial work to address these problems and anticipates concluding the Pensions Review by November 2002. 5. Further details of this matter are contained in a press release issued by the FSA on 27 August.

Ombudsman complaints

new complaints, January–June 2025

347

upheld, against a 31% median

33%

about pensions

293

A bigger firm gets more complaints simply because it has more customers.

Customer compensation schemes

The FCA has ordered this firm to review past sales and pay back customers who lost out.

• January 2013 The firm is required to abide by the Deed Poll and Declaration in relation to the past business of NPI Limited FRN 190768 for which the firm has accepted responsibility as regulated activaties and investment, general…